Author Archives: Reuters News Agency

Rapid COVID-19 tests increasingly scarce, pricey as demand from employers jumps

By Carl O’Donnell

(Reuters) – Surging demand for COVID-19 tests from U.S. employers has exacerbated a nationwide shortage of rapid tests in recent weeks and is driving up costs for state and local testing programs, according to industry executives and state officials.

Test makers including Abbott Laboratories, Quidel Corp and LumiraDX Ltd are scaling up production to meet rising demand. But significantly boosting test output will take weeks to months, half a dozen industry executives told Reuters, making the tests harder to procure in the near term.

“Employer demand has gone crazy,” said Quidel Chief Executive Doug Bryant. “We won’t be able to meet all the requests that we’re having.”

Nearly a dozen state governments said they are grappling with shortages of rapid tests, which provide on-the-spot results within minutes and are crucial for COVID-19 surveillance programs.

In Missouri, limited supplies of Abbott’s Binax Now rapid test, which typically sell to states for around $5 each, have forced it to consider other, more expensive options, a spokesperson for the states’ public health agency said.

“We are exploring other rapid antigen tests and finding most are at least three times higher than Abbott’s rapid antigen test,” the spokesperson said, adding that Missouri has not yet had to purchase the pricier tests.

Oklahoma has begun to pay higher prices for tests in recent weeks, said Michael DeRemer, the state’s director of emergency preparedness and response services.

State governments have been struggling to acquire enough rapid tests for several months after a surge in COVID-19 cases fueled by the more contagious Delta variant.

And U.S. employers in recent weeks have been rushing to stockpile tests after the White House in September said it plans to mandate weekly testing for unvaccinated staff at businesses with more than 100 employees.

Emerald Packaging Inc, a plastic bag factory in San Francisco with 250 workers, sees the cost of complying with the government’s testing mandate as a burden and is urging employees to get vaccinated.

Emerald may require vaccination once the federal rule goes into effect, said CEO Kevin Kelly. He said Emerald has spent about $50,000 testing its employees so far and is concerned weekly tests will further drive up costs.

Quidel has had to decline more than half of requests from employers seeking to stock up ahead of the mandate, expected to take effect in October, said CEO Bryant.

It has also had to postpone exports of rapid tests to some foreign governments until next year, Bryant said. Quidel is delivering on existing contracts with countries including Canada.

BIDDING WARS, SIGNIFICANT MARKUPS

U.S. test makers manufacture more than 50 million rapid COVID-19 tests each month, not enough for regular surveillance testing at schools and workplaces across the country, said Evercore ISI analyst Vijay Kumar.

Rapid antigen tests can cost as little as $2 each to make, according to Mologic, one of the largest British test makers. But in the United States, bidding wars between health systems, state governments, and employers have contributed to much higher prices.

South Carolina, for example, is paying as much as $130 each for some of its rapid tests, a state spokesperson said.

That contrasts sharply with the UK and European countries. In Germany, large government purchases allow it to offer rapid tests to residents for less than $1 each, and it is not experiencing severe shortages.

Abbott and Quidel said they do not plan to raise test prices for customers. However, retailers and test providers often purchase tests and resell them at significant markups.

Walgreens Boots Alliance Inc and CVS Health Corp sell Abbott’s Binax Now rapid tests – which Abbott lists for around $5 – for $12 per test at pharmacies. Walmart Inc, Kroger and Amazon.com Inc charge nearly $8 per test even after they slashed prices temporarily to cost.

States largely have been using the $10 billion the White House set aside primarily for school testing programs. Some states including Missouri said their federal aid is running out.

Meanwhile, employers and consumers must pay for rapid test purchases themselves.

In an effort to ramp up production, Abbott reopened a plant in Illinois it had shuttered earlier this year, putting it back on track to produce upwards of 50 million Binax Now tests per month by the end of October, a person familiar with the matter told Reuters.

Quidel is building a new plant that will boost its rapid test output from around 20 million per month to as much as 70 million, but it will not be operational until year-end, Bryant said. LumiraDX is planning to nearly double its test production by year end.

On Monday, U.S. regulators authorized a rapid test made by ACON Laboratories, which plans to produce as many as 100 million per month by the end of the year.

“There’s definitely a supply chain squeeze on the rapid antigen side,” said Matthew McKnight, an executive at Ginkgo BioWorks, which manages surveillance testing programs for employers. “It will take a couple months (before) production catches up.”

(Reporting by Carl O’Donnell in New York, Additional reporting by Tim Aeppel in New York; Editing by Caroline Humer and Bill Berkrot)

GM to open battery cell development center in push to cut EV costs

By Ben Klayman

DETROIT (Reuters) – General Motors Co on Tuesday said it will open a battery cell development center in southeast Michigan to help it drive down the cost and boost the driving range of electric vehicles with lithium ion and solid-state battery cells.

The Wallace Battery Cell Innovation Center, to be located on the No. 1 U.S. automaker’s technical campus in Warren, Michigan, is expected to open in mid-2022 and begin building prototype cells in the fourth quarter, GM said.

“The key to making these vehicles affordable is going to be the cell cost in the battery packs,” Ken Morris, GM’s vice president of electric and self-driving vehicles, said on a conference call with reporters. GM will spend “hundreds of millions” of dollars on the new center, he added.

GM has said it will spend $35 billion through 2025 on EVs and autonomous vehicles, and is expected to outline targets beyond that period at its investor day on Wednesday.

Part of that push is GM’s partnership with LG Energy Solutions, a unit of South Korea’s LG Chem, to develop its Ultium batteries. The companies have announced two joint-ventures battery plants and GM has said it intends to open two more.

GM has targeted eliminating emissions from all light vehicles it sells by 2035.

A key element to making EVs more attractive to consumers is driving down their cost and a big part of that is the batteries. GM has said it wants to have at least 60% lower battery costs in the next generation of Ultium and officials said future products will allow electric driving ranges of 600 miles (965 km) on a single charge.

The new facility, at almost 300,000 square feet (27,900 square meters), will work with the company’s existing materials research and development and battery systems labs in Warren. It will also work with SES, a Massachusetts company with which GM formed a partnership with in March.

The center, named for Bill Wallace, a former executive who played a key role in the development of GM’s advanced battery technology before he died from cancer in 2018, will be capable of building large-format, prototype lithium-metal battery cells, as well as developing silicon and solid-state technologies.

It will also develop new production methods to use in battery plants.

GM rival Ford Motor Co in April said it would invest $185 million to open in late 2022 an EV battery development center.

(Reporting by Ben Klayman in Detroit; editing by Richard Pullin)

Mexico seeks reciprocity from U.S. on security, minister says before talks

MEXICO CITY (Reuters) – Mexico will work during high-level security talks this week to ensure “reciprocity” from the United States on matters such as arms trafficking and extraditions, Foreign Minister Marcelo Ebrard said on Tuesday.

U.S. Secretary of State Antony Blinken, Secretary of Homeland Security Alejandro Mayorkas and Attorney General Merrick Garland will be among the delegation of top U.S. officials due to hold meetings in Mexico City on Friday.

Reiterating that it was time to “leave behind” the so-called Merida Initiative, a U.S.-Mexican scheme providing funds for military expenditure, Ebrard said Mexico was ushering in a new “symmetrical and respectful” phase in security cooperation.

Ebrard said Mexico had 10 priorities essentially aimed at reducing violence, and wanted to ensure that there was “reciprocity in controlling arms trafficking, reciprocity in legal assistance, reciprocity in extraditions, and so on”.

President Andres Manuel Lopez Obrador has promoted a non-confrontational approach to combating chronic gang violence in Mexico, arguing that economic development is the most effective way of reducing the appeal of organized crime.

(Reporting by Dave Graham; Editing by Emelia Sithole-Matarise)

U.S. envoy Sullivan to meet China’s top diplomat Yang amid Taiwan tensions

BEIJING (Reuters) -U.S. President Joe Biden’s national security adviser will hold talks with China’s top diplomat in Switzerland on Tuesday and Wednesday, the South China Morning Post said, at a time of rising tension over several issues including Taiwan.

“They aim to rebuild communication channels and implement consensus reached between presidents Xi Jinping and Joe Biden,” the newspaper reported on Tuesday, citing an official familiar with the arrangements for the meeting between Jake Sullivan and Yang Jiechi.

Both the White House and the Chinese foreign ministry did not immediately respond to a Reuters request for comment.

Ties between China and the United States deteriorated sharply under former U.S. President Donald Trump, and the Biden administration has maintained pressure on China on a range of issues from Hong Kong and the Xinjiang region to the origins of COVID-19.

China has also been angered by increased U.S. support for Taiwan, believing the United States is colluding with forces there seeking the island’s formal independence, a red line for Beijing.

“Our commitment to Taiwan is rock solid and contributes to the maintenance of peace and stability across the Taiwan Strait and within the region,” White House spokeswoman Jen Psaki told reporters on Monday.

“We have been clear privately and publicly about our concern about the PRC’s (People’s Republic of China) pressure and coercion toward Taiwan, and we will continue to watch the situation very closely,” she said.

Trade tensions are also at the top of the U.S.-China agenda, with U.S. Trade Representative Katherine Tai traveling to Paris Monday to participate in Organization for Economic Co-operation and Development meetings later this week.

On Monday, the USTR unveiled the results of a months-long “top-to-bottom” review of China trade policy, pledging to hold “frank” talks with Beijing about its failure to keep promises made in Trump’s trade deal and end harmful industrial policies.

The Global Times, a tabloid published by the ruling Communist Party’s official People’s Daily, said in a commentary China was willing to build mutually beneficial trade with the United States but would not make concessions on principle and was not afraid of a drawn-out contest.

“The China-U.S. trade war has lasted for more than three-and-a-half years. Instead of being weakened, China’s economy has taken a step forward in comparison with the scale of the U.S.,” it said.

The meetings this week will be yet another round of in-person talks between officials from the two powers since Biden took office, with little in the way of concrete progress in the earlier sessions.

In late July, Deputy Secretary of State Wendy Sherman, the second-ranking U.S. diplomat, held face-to-face meetings with Xie Feng, a Chinese vice foreign minister, in the Chinese port city of Tianjin.

No specific outcomes were agreed and the prospect of a meeting between Biden and Xi was not discussed, senior U.S. administration officials said at the time.

In March, during high-level talks in Alaska, Chinese officials including Yang Jiechi railed against the state of U.S. democracy, while U.S. officials accused the Chinese delegation of grandstanding.

(Reporting by Ryan Woo in Beijing and Aakriti Bhalla in Bengaluru and Steve Holland in Washington; Editing by Kim Coghill, Robert Birsel, Heather Timmons and Steve Orlofsky)

A month after Ida’s landfall, Louisianans decry ‘Third World’ conditions

By Brad Brooks

CROZIER, La. (Reuters) -Bruce Westley stood outside his wrecked mobile home, pointing to a small lime green tent, two patio chairs and a 30-quart aluminum pot atop a single propane burner.

“For more than a month, that’s been our bedroom, our living room and our kitchen,” said the 65-year-old disabled Navy veteran. He and his wife Christina are among thousands of southeast Louisianans struggling more than a month after Hurricane Ida swept through the heart of Cajun country.

Reuters traveled the bayous of hard-hit Terrebonne, Lafourche, Jefferson and Plaquemines parishes in recent days, speaking with more than 40 residents. All said they felt abandoned by state and federal officials. A few said they had not received any type of support from any level of government.

“We can’t keep living like this,” Westley said. “We just need any damn thing to get off the ground, man.”

In most areas it looked as if Ida rolled through only a day or two ago. Old timers who say they’ve seen it all swear they have never witnessed a more destructive storm.

A Federal Emergency Management Agency (FEMA) spokesman said the agency was working as quickly as possible. Louisiana’s Governor John Bel Edwards on Monday announced a temporary sheltering program supported by FEMA that he said would start bringing trailers into the hardest-hit areas to alleviate housing shortages.

The human misery and the piles of debris testify to the massive strain on public and private resources in a hurricane-prone area. The scenes also raise questions about how the United States will cope as climate change creates a new, more destructive normal.

Reuters saw no heavy equipment, trucks or workers helping people clear the rubble and recover their belongings. The only government presence was in the form of law enforcement officers and staff at FEMA mobile centers processing disaster claims. Residents said it has basically been that way since Ida made landfall on Aug. 29 and killed 26 people, though roadways in the area were largely cleared of debris.

Hundreds of people, many of them elderly and children, were in tents. Others were in homes that clearly have severe structural damage and where mold, which can impact respiratory health and cause severe allergic reactions, was spreading.

Grocery stores, most restaurants and other businesses remain closed. Power is still out for thousands of people and many have no water or sewage services.

Despite the difficulties, communities are trying to band together. Outside the Howard Third Zion Travelers Baptist Church just two blocks down from where Westley and his wife are camping, volunteers say they have been handing out meals to 1,000 families daily. Ida destroyed the church’s south-facing wall.

“You want to know what’s been going on to help these people? Pretty much nothing,” said Talisa Clark, a community activist for the historically Black area who has been helping coordinate the food distribution. “There are no state or federal boots on the ground to help. It’s looking like a Third World country’s efforts down here.”

Clark was forced out of her badly damaged home near Houma and has been staying with relatives.

Parish officials for Terrebonne, Lafourche, Jefferson and Plaquemines did not respond to a request for comment.

DIFFICULT CHOICES

John Mills, a Federal Emergency Management Agency (FEMA) spokesman at a support site in Golden Meadow, Louisiana, said he understood the frustrations of those who survived Ida.

“Families and communities will have to face difficult choices about how to rebuild – and whether to rebuild here at all,” he said.

FEMA is distributing money so people can rent housing for at least two months. In addition, as of Monday FEMA said it was paying hotel costs for nearly 8,000 families. In total, it estimates it has spent at least $30 million in hotel costs.

“That plan probably works under most circumstances. But the breadth of Ida’s damage is so huge, that there’s no housing stock, there’s no hotel rooms available,” said Tanner Magee, a state representative whose district includes Terrebonne parish.

State and parish governments have contracted out the task of picking up debris, but have struggled with even deciding on where they will put it, Magee said. He said far more workers and trucks were needed in hard-hit areas.

Magee and his family, who live in Houma, are staying in his Ida-damaged home.

“If you see this destruction around you constantly and it’s not going anywhere, it beats down on people,” Magee said. “I’m really worried about the mental health of people.”

Magee and others say they need temporary FEMA trailers. FEMA says that takes several weeks, and is complicated by federal and state regulations that make it difficult to bring in temporary shelters during hurricane season.

FEMA, along with the Small Business Administration, has paid out over $1.1 billion for Ida damage so far, mostly through grants to homeowners, along with FEMA’s national flood insurance program. Uninsured damage estimates are upward of $19 billion, according to the property data and analytics company CoreLogic, with 90% of those losses along Louisiana’s coast, and the rest in Alabama and Mississippi. There could be another $21 billion in damage to insured properties.

STAY RIGHT HERE

In Galliano, Maria Molina hand washed shirts and shorts for her 7-year-old daughter Julia and grown son Leonardo; she then hung them out to dry.

“I’m out of work, I’m out of money and we’re out of food. We don’t have anywhere to go, even though this trailer seems unsafe,” she said of her blue mobile home, which was now akilter with a damaged roof and foundation.

Molina was awaiting word on whether she’ll qualify for any FEMA aid.

Down the road in the town of Golden Meadow, Rosie Verdin, 73, stood on the tilted porch of her home behind the tribal headquarters of her United Houma Nation.

Verdin said Ida’s destruction was the worst she’d seen. Some three-fourths of her tribe’s 19,000 members saw their homes destroyed or left uninhabitable.

“But there is nothing that will drive us off this land,” she said. “With or without help, we’ll rebuild and stay right here.”

(Reporting by Brad Brooks; Editing by Donna Bryson and Aurora Ellis)

Pandora Papers: Rich and powerful deny wrongdoing after dump of purported secrets

WASHINGTON (Reuters) – The Czech prime minister, the king of Jordan and the chairman of a well-known Indian conglomerate were among global figures denying wrongdoing on Monday after the leak of what major news outlets called a secret trove of documents about offshore finance.

India said it would investigate cases linked to the data dump, known collectively as the “Pandora Papers,” while Pakistani Finance Minister Shaukat Tarin said officials named in the documents would be investigated – including himself.

The Kremlin said it had seen no evidence in the leak of hidden wealth among Russian President Vladimir Putin’s entourage, after the Washington Post said the documents showed Putin’s mistress had used offshore funds to buy a flat in Monaco.

The dump of more than 11.9 million records, amounting to about 2.94 terabytes of data, was five years after the leak known as the “Panama Papers” exposed how money was hidden by the wealthy in ways that law enforcement agencies could not detect.

The International Consortium of Investigative Journalists (ICIJ), a Washington-based network of reporters and media organizations, said the files are linked to about 35 current and former national leaders, and more than 330 politicians and public officials in 91 countries and territories.

It did not say how the files were obtained, and Reuters could not independently verify the reports or the documents detailed by the consortium.

The use of off-shore companies is not illegal or by itself evidence of wrongdoing, but news organizations in the consortium said such transactions could be used to hide wealth from tax collectors and other authorities.

Jordan’s King Abdullah, a close U.S. ally, was reported to have used offshore accounts to spend more than $100 million on luxury homes in the United Kingdom and the United States.

The royal palace said in a statement it was “no secret that His Majesty owns a number of apartments and residences in the United States and the United Kingdom. This is not unusual nor improper.”

In his first comments on the matter, Abdullah told tribal leaders: “The cost of these properties and all related expenditures have been personally funded by His Majesty. None of these expenses have been funded by the state budget or treasury.”

“There is nothing I have to hide from anyone but we are stronger than this and this is not the first time people target Jordan,” the monarch told the gathering.

DLA Piper, a London law office representing Abdullah, told the consortium of media outlets that he had “not at any point misused public monies or made any use whatsoever of the proceeds of aid or assistance intended for public use.”

The U.S. State Department spokesman said the United States was reviewing the findings of the Pandora Papers but was in no position to comment on specifics.

Addressing a specific query about Jordan, a significant recipient of U.S. aid, Ned Price said U.S. assistance to Amman was “in the direct national security interests of the United States.”

“We carefully conduct monitoring and evaluation of all of our programs to ensure they are implemented according to their intended purpose,” he said.

The Washington Post, which is part of the consortium, also reported on the case of Svetlana Krivonogikh, a Russian woman who it said became the owner of a Monaco apartment through an offshore company incorporated on the Caribbean island of Tortola in April 2003 just weeks after she gave birth to a girl. At the time, she was in a secret, years-long relationship with Putin, the newspaper said, citing Russian investigative outlet Proekt.

The Post said Krivonogikh and her daughter, who is now 18, did not respond to requests for comment.

The Kremlin said it had seen no evidence in the leak of hidden wealth among Putin’s inner circle.

“For now it is just not clear what this information is and what it is about,” spokesperson Dmitry Peskov said. Asked about Putin’s alleged relationship with Krivonogikh in November, Peskov said he had never heard of her.

PAKISTAN OPPOSITION SEEKS RESIGNATIONS

Days ahead of the Czech Republic’s Oct. 8-9 parliamentary election, the documents reportedly tied prime minister Andrej Babis to a $22 million estate near Cannes, France.

Speaking in a television debate, Babis, who was a billionaire before he entered politics, denied any wrongdoing.

“The money left a Czech bank, was taxed, it was my money, and returned to a Czech bank,” Babis said.

Lebanon’s former prime minister Hassan Diab said he had given up shares in a company he was linked to in the leak, and denied wrongdoing. A statement by his office said he had taken part in founding the company in 2015 and owned 17 shares, but that the firm had no activity since then and he had resigned and sold his stake.

The Indian Express, part of the consortium, said the documents showed that businessman Anil Ambani and his representatives owned at least 18 offshore companies in Jersey, the British Virgin Islands and Cyprus.

Set up between 2007 and 2010, seven of these companies had borrowed and invested at least $1.3 billion, the report said.

In 2020, following a dispute with three Chinese state-controlled banks, Ambani, chairman of Reliance Group, had told a London court his net worth was zero.

Ambani did not immediately respond to a Reuters request seeking comment.

An unidentified lawyer, on behalf of Ambani, told the Express: “Our client is a tax resident of India and has made disclosures to Indian authorities as required to be made in compliance with law. All required considerations were taken into account when making disclosures before the London court. The Reliance Group conducts business globally and for legitimate business and regulatory requirements, companies are incorporated in different jurisdictions.”

India’s Finance Ministry said it would investigate cases linked to the Pandora Papers and take appropriate action, adding: “The government will also proactively engage with foreign jurisdictions for obtaining information in respect of relevant taxpayers/entities.”

Pakistan’s opposition called on Prime Minister Imran Khan to order cabinet ministers and aides named in the leak to resign and face investigation.

Finance minister Tarin, among the Pakistanis identified, told Geo TV everyone would be investigated, including himself. He denied wrongdoing.

“If any wrongdoing is established we will take appropriate action,” Khan said on Twitter.

(Reporting by Washington newsroom; writing by William Maclean, Peter Graff; Editing by Jon Boyle and Grant McCool)

Biden says Republican stonewalling on debt ceiling risks U.S. default

By Susan Cornwell, Richard Cowan and Jarrett Renshaw

WASHINGTON (Reuters) -President Joe Biden said on Monday the federal government could breach its $28.4 trillion debt limit in a historic default unless Republicans join Democrats in voting to raise it in the two next weeks.

Senate Republicans, led by Minority Leader Mitch McConnell, have twice in recent weeks blocked action to raise the debt ceiling – saying they do want action but will not help. Republicans say Democrats can use a parliamentary maneuver known as budget reconciliation to act alone. Top Democrats have rejected that approach.

“Raising the debt limit comes down to paying what we already owe … not anything new,” Biden said at a White House news conference.

Asked if he could guarantee the United States won’t breach the debt limit, the president answered: “No I can’t. That’s up to Mitch McConnell.” He said he intended to speak with McConnell about the matter.

In a high-stakes standoff over parliamentary maneuvers. McConnell for months has been saying that Democrats should use a process called “budget reconciliation” to get around the Senate’s filibuster rule, which requires 60 of 100 members to agree to pass most legislation. Senate Majority Leader Chuck Schumer, a Democrat, has rejected that approach and Biden on Monday pleaded not to use the filibuster to block action.

“Just get out of the way,” Biden told Republicans. “If you don’t want to help save the country, get out of the way so you don’t destroy it.”

Late last month the U.S. House of Representatives passed and sent to the Senate a bill to suspend the limit on Treasury borrowing through the end of 2022.

Schumer on Monday said that later this week the Senate would vote for a third time on a measure to suspend the debt limit.

Treasury Secretary Janet Yellen last week warned lawmakers that the United States government was close to exhausting its federal borrowing capabilities by about Oct. 18.

Failure to act could have catastrophic economic consequences. Moody’s last month warned that it could cause a nearly 4% decline in economic activity, the loss of almost 6 million jobs, an unemployment rate of close to 9%, a sell-off in stocks that could wipe out $15 trillion in household wealth and a spike in interest rates on mortgages, consumer loans and business debts.

Democrats note that they voted to raise the debt limit during Republican Donald Trump’s administration even though they opposed deep tax cuts that added to the debt.

Biden said the United States racked up nearly $8 trillion in new debt over Trump’s four years in office, more than one quarter of the entire debt outstanding.

“Republicans in Congress raised the debt three times” under Trump, he said, with Democratic support.

STOCKS SLIDE

Concerns over the debt ceiling contributed to Monday’s drop in the stock market. Wall Street’s main indexes tumbled on Monday as investors shifted out of technology stocks in the face of rising Treasury yields, with concerns about U.S.-China trade, Taiwan and the debt ceiling in the forefront.

McConnell stuck to his guns in remarks to the Senate, and in an open letter to Biden on Monday.

“The majority needs to stop sleepwalking toward yet another preventable crisis. Democrats need to tackle the debt limit,” McConnell said on the Senate floor.

In a letter to Biden, McConnell said that the Democrats do not need Republican cooperation to pass a bill to raise the debt ceiling. Democrats have had nearly three months notice from Republicans about their position on the matter, McConnell wrote.

McConnell is known for standing his ground once he takes a controversial position. For example, in 2016 he refused to allow a Senate hearing on then-President Barack Obama’s nomination of Merrick Garland to a seat on the Supreme Court – holding the seat open until after Trump assumed office nearly a year later.

Schumer said the Senate will have to stay in session through the weekend and possibly into a planned recess next week if no progress is made on raising the debt limit.

Last week, the Senate’s parliamentarian ruled that Schumer could use the reconciliation process to bring a debt limit bill to the Senate floor, according to a source familiar with the ruling.

According to the parliamentarian, doing so would not jeopardize Democrats’ efforts to bring a second bill to the Senate floor under reconciliation. That is the multitrillion-dollar bill embracing Biden’s domestic agenda expanding social services and addressing climate change that Democrats are developing.

(Reporting by Susan Cornwell, Richard Cowan and Jarrett Renshaw; additional reporting by David Morgan, Jeff Mason, Steve Holland, Diane Bartz and Eric Beech; Editing by Scott Malone, Mark Porter and Grant McCool)

Canada formally invokes 1977 pipeline treaty with U.S. over Line 5 dispute

By Nia Williams and Sebastien Malo

CALGARY, Alberta (Reuters) -Canada on Monday formally invoked a 1977 treaty with the United States to request negotiations over Enbridge Inc’s Line 5 pipeline, escalating a long-running dispute over one of Canada’s major oil export pipelines.

Line 5 ships 540,000 barrels per day of crude and refined products from Superior, Wisconsin, to Sarnia, Ontario, but the state of Michigan wants it shut down over worries that a leak could develop in a four-mile section running beneath the Straits of Mackinac in the Great Lakes.

Enbridge ignored Michigan’s order to halt operations earlier this year. The sides are embroiled in a legal battle, and took part in court-ordered mediation. The government of Canada has been pushing counterparts in the United States to intervene to help keep the pipeline open.

In a letter to the federal judge presiding over the case, Gordon Giffin, legal counsel for the Canadian government, said Canada had formally invoked Article Six of the 1977 Transit Pipelines Treaty.

The treaty, designed to stop U.S. or Canadian public officials from impeding the flow of oil in transit, has never been invoked before.

Canada’s foreign ministry and the U.S. State Department did not immediately respond to requests for comment.

Enbridge spokeswoman Tracy Larsson said Michigan had let parties know it is not committed to further mediation.

“We greatly appreciate the efforts of ‘Team Canada’ – from the Government of Canada to the provinces of Ontario, Quebec, Alberta and Saskatchewan for their commitments and efforts to keep Line 5 open,” she said in an email.

(Additonal reporting by Steve Scherer in Ottawa; Editing by David Gregorio)

U.S. Supreme Court rejects challenge to New York tax on opioid companies

By Lawrence Hurley and Nate Raymond

WASHINGTON (Reuters) -The U.S. Supreme Court on Monday cleared the way for New York to collect a $200 million surcharge imposed on opioid manufacturers and distributors to defray the state’s costs arising from the deadly epidemic involving the powerful painkilling drugs.

The justices declined to hear an appeal by two trade groups representing drug distributors and generic drug makers and a unit of British-based pharmaceutical company Mallinckrodt Plc of a lower court’s decision upholding the surcharge.

The law’s challengers included the Association for Accessible Medicines, whose members include drugmakers Teva Pharmaceutical Industries Plc and Mallinckrodt, and the Healthcare Distribution Alliance, which represents wholesale distributors.

The alliance’s members include the three largest opioid distributors in the United States, McKesson Corp, AmerisourceBergen Corp and Cardinal Health. They proposed in July paying $21 billion to resolve lawsuits accusing them of fueling the epidemic.

Mallinckrodt filed for bankruptcy protection in 2020 and has been seeking to finalize a similar, $1.7 billion settlement.

The payments to New York were owed under the Opioid Stewardship Act, which Democratic former Governor Andrew Cuomo signed into law in 2018 to address the costs the epidemic imposed on the state.

The law marked the first time a state had sought to impose a tax or fee related to the epidemic on opioid manufacturers and distributors. Delaware, Minnesota and Rhode Island have since adopted their own taxes.

The Association for Accessible Medicines and the Healthcare Distribution Alliance in separate statements expressed disappointment in the Supreme Court’s action. The alliance said it is evaluating its options and next steps.

Opioids have resulted in the overdose deaths of nearly 500,000 people from 1999 to 2019 in the United States, according to the U.S. Centers for Disease Control and Prevention, part of an ongoing public health crisis.

The New York law envisioned collecting $100 million annually from prescription painkiller manufacturers and distributors based on their market shares from 2019 to 2024, or $600 million in total.

A federal judge in 2018 ruled that a provision barring the companies from passing on the costs of making the payments to consumers was unconstitutional and could not be severed from the rest of the law.

The state appealed, but following that ruling New York enacted a new tax law that did not include the pass-through prohibition, limiting the case to $200 million in payments owed based on 2017 and 2018 market shares.

The New York-based 2nd U.S. Circuit Court of Appeals in 2020 handed a victory to the state, ruling that the judge lacked authority to strike down the law. The challengers then appealed to the Supreme Court.

The justices acted on the case on the first day of their new nine-month term.

(Reporting by Lawrence Hurley and Nate Raymond; Editing by Will Dunham)

Taliban say forces destroy Islamic State cell hours after Kabul blast

By Gibran Naiyyar Peshimam

KABUL (Reuters) -Taliban government forces destroyed an Islamic State cell in the north of Kabul late on Sunday in a prolonged assault that broke the calm of a normally quiet area of the capital with hours of explosions and gunfire, officials and local residents said.

With Afghanistan’s economy close to collapse and large areas of the country in danger of famine, the presence of an apparently well-armed militant cell in Kabul underlined the daunting scale of the challenge facing the new government.

The Taliban operation came after a bomb attack near a mosque in Kabul earlier on Sunday that was later claimed by Islamic State. That blast killed and wounded a number of civilians in what appeared to be the worst attack in the Afghan capital since the withdrawal of U.S. forces at the end of August.

The local affiliate of Islamic State, known as ISIS-Khorasan after an ancient name for the region, has already claimed to have carried out attacks on Taliban targets and remains unreconciled to the Afghan Islamist movement.

Taliban spokesperson Zabihullah Mujahid said a special Taliban unit carried out an operation against ISIS elements in Kabul’s 17th district, in the city’s north, destroying their base and killing all those in it.

Local residents said the Taliban forces cordoned off the area before beginning their assault at around 7.30 p.m., before a firefight that lasted several hours, interrupted by at least two blasts as the suspected ISIS fighters detonated explosives.

“For about three hours the clashes were very intense and several powerful explosions also took place,” said Hashmatullah, a local shopkeeper.

One local resident, who asked not to be named for security reasons, said a final blast occurred at around 11.30 p.m. when an explosives-packed car blew up, apparently killing all the ISIS fighters in the building where they were holed up.

He said sporadic gunfire could be heard late into the night and early morning near the compound.

As pickup trucks carried furniture and other items out of the partially destroyed compound on Monday, Taliban soldiers sealed off the area, ushering away bystanders.

LINGERING SECURITY THREATS

The Taliban, who are also fighting the remnants of forces loyal to Ahmad Massoud, an opposition leader from the Panjshir region north of Kabul, have said they have almost complete control of the country.

But Sunday’s violence, and a string of smaller incidents in recent days in areas including Nangarhar on the border with Pakistan and Parwan north of Kabul, have shown that security threats have not disappeared.

Islamic State’s Amaq news agency said on Telegram the group carried out the mosque bombing.

IS has also claimed responsibility for bomb attacks in the eastern city of Jalalabad as well as a suicide attack in late August that killed 13 U.S. soldiers and scores of Afghan civilians who were crowded outside the Kabul airport gates, desperate to secure seats on evacuation flights.

Samiullah, a resident of Kabul who runs a street vendor cart near the mosque, said that, initially, even if the economic situation had worsened since the Taliban takeover, the improved security situation was a consolation.

“We regret that the situation has gone from bad to worse,” he told Reuters close to the mosque premises after being ordered to move away from his usual spot. “The situation is not normal yet. No one is allowed in this area except for the Taliban.”

(Editing by James Mackenzie and Mark Heinrich)